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Government seeks to expand wage subsidy programme

Prime Minister Antti Rinne's coalition hopes to give work to 20,000 jobless by expanding the use of state salary support.

Maria Rokka irtisanottiin Postista kymmenen vuotta sitten
Wage subsidies helped Maria Rokka find work with the Finnish Red Cross. Image: Antti Haanpää / Yle

Finland's government coalition says it hopes to give work to up to 20,000 jobless people by expanding the scope of the state's wage subsidy. TE employment offices in Finland grant employers wage subsidies from the government to cover the remuneration of unemployed jobseekers.

Charity organisations such as the Finnish Red Cross traditionally employ many people in this way. For example, 1,408 employees of the 1,500 total that work for the Finnish Red Cross' twelve Kontti second hand stores were hired via the wage subsidy.

Maria Rokka is one of the hundreds of people the state-owned postal service Posti has laid off in the last decade or so. She was let go after 42 years of service in November 2009, when Finland's unemployment rate rose to over eight percent.

"Looking for work was a constant rollercoaster of emotions. My hopes would get up when I sent the application, and then I would be disappointed and things would head downhill, over and over again. It was really draining," she says.

She tried several work trials and temporary wage subsidy positions, but her income was scarce and she was forced to collect basic assistance, a form of last-resort state benefit.

"Win-win situation"

Finally, in the summer of 2017, Rokka was hired to work at one of Kontti stores, where the state covers her salary in full, in the form of a wage subsidy to the Finnish Red Cross. She says it has been a win-win situation for both the employer and employee.

"It has tremendous psychological significance. It raises your sense of personal value and makes you feel as if you are good enough for something," she says.

She doesn't see the wage subsidy programme as a work-around to brighten employment numbers, as she says the experience has enforced her trust in the future. She says her work experience – subsidized or not – will definitely help in her search for other work, if her work relationship at Kontti were to end.

Great gov't expectations

Finland's new left-leaning government also believes in the transformative power of the wage subsidy, and is planning to invest in expanding the scheme to twice its current size.

Employment minister Timo Harakka says the expansion will pay for itself by eliminating the cost of participant's social benefits. He encourages companies and organizations in Finland to use the wage subsidy more extensively.

"I think we have to be ambitious from the start: we will double the use of the wage subsidy and this alone will mean the creation of 20,000 new jobs," he says.

30-50% support for firms, 100% for organisations

According to the website of the TE employment offices, the purpose of the wage subsidy is to advance the employment of jobseekers on the open labour market. Although the wage subsidy is granted and paid to the employer, the granting of the subsidy is always based on the unemployed jobseekers' need for the service, due to possible shortcomings in their professional skills or an injury or illness that affects their ability to cope at work.

Companies that take on the jobless through the programme receive 30 to 50 percent of the salary expenses from the state. For organizations like the Finnish Red Cross, this percentage can rise to 100 percent.

The government also says it plans to scrap the wage subsidy's current 4,000-worker limit for organisations, imposed by Finland's previous government.

A government study from December 2018 evaluated the impact of wage subsidies on unemployed person' subsequent employment and earnings. Results found that subsidies paid to firms tend to improve the post-subsidy earnings of those hired. For people employed at organisations, however, the experience improved their employment chances only slightly.

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